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7.11.2011

Washington Court of Appeals Breaks New Ground in Insurers’ Duties When Handling Third-Party Liability Claims Before the Insured is Sued

On July 5, the Washington Court of Appeals issued its decision in Tarutis v. Farmers Insurance, concerning an insurer’s duty to accurately adjust claims and settle within policy limits. The Court held that the insurer breached its duty of good faith and fair dealing by failing to attempt to settle a claim against its insured prior to suit being filed against the insured. It also held that the insurer’s subsequent tender of policy limits after suit was filed against the insured did not cure this breach. As a result, the insurer was exposed to liability far in excess of its policy limits.